Industry Skills Forecast and Proposed Schedule of Work

Transcription

1 Industry Skills Forecast and Proposed Schedule of Work May

2 Executive summary [TBC, to be written after IRC has reviewed draft] PwC 2

3 Executive summary Contents Executive summary 2 1 Sector overview The sector at a glance 6 2 Employment and skills outlook overview Employment outlook Skills outlook Training serving the sector Key drivers for change overview 18 3 Proposed responses NSC need analysis results Proposed responses 24 4 Consultation undertaken 27 5 Proposed Schedule of Work overview Next steps 28 6 IRC Sign off 29 Appendices 31 Appendix A Administrative Information 32 PwC s Skills for Australia 3

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5 Skills forecast

6 1 Sector overview 1.1 The sector at a glance The naval shipbuilding (NSB) industry, defined as Australia s sovereign naval shipbuilding capability for this report, describes the design, build, test and sustainment of vessels for the defence of Australia. Workers in this industry undertake a range of activities in connection with defence vessels, including complex design, advanced manufacture, systems integration, and outfitting capabilities. Australia s industrial capability to build large and complex naval vessels has diminished in recent years. However, the 2016 Defence White Paper set out the Australian Government s plan for the largest recapitalisation of the Royal Australian Navy (RAN) since the Second World War, including affirmation of the commitment to build a sustainable naval shipbuilding capability in Australia. 1 To achieve this commitment, the Australian Government will invest approximately $90 billion in a continuous build program for submarines, frigates and offshore patrol vessels (OPVs) through to The Government s long-term plan includes investment in infrastructure and workforce development. This investment provides businesses and individuals with the confidence to invest in their own capability and capacity building, to help deliver the domestic build and employment requirements for these programs. As stated in the Plan 2017, Government investment includes funding for Australia s industrial base in a way that gives existing businesses the capability to act as prime contractors to successfully plan and execute the design, construction and sustainment of future fleets of major surface combatants. 3 This endeavour is to develop national capability to design, develop and build a fleet that can be used for the defence of Australia and for potential export in niche markets. 4 The industry is therefore in a transition phase, with capacity being created through investment Programs of work The current NSB industry in Australia is focused on four programs of work: Future Submarines. 12 Attack Class submarines to replace the existing fleet of Collins Class submarines. 5 Offshore Patrol Vessels. 12 Arafura Class boats to replace the Armidale Class patrol boats. 6 Pacific Patrol Boat Replacements. 21 Guardian Class patrol boats built for 12 Pacific Island nations and Timor Leste. 7 Future Frigates. Nine Hunter Class frigates to replace the existing fleet of Anzac Class frigates. 8 Each of these programs can be broken down into four phases of work: Design, including developing concept drawings, engineering solutions as well as changes to planning and design documents. Build, including the fabrication and installation of components in compliance with design drawings. PwC s Skills for Australia 6

7 Test, including activation and evaluation. Sustainment, including all maintenance, repair and overhaul of vessels to ensure seaworthiness Job roles in the sector At each phase of work, the industry requires a different mix of skills. To assist in determining those skills, the following five job families (group of similar jobs) 9 have been formed. This builds on the taxonomy developed by the College (NSC) in collaboration with the prime contractors ( primes ), and broader defence industry. Each job family contains a number of job functions (groups of similar skills) 10 and associated job roles (specific capabilities). 11 Based on industry consultation and our analysis, all job roles across the NSB industry can be grouped into the following five job families:, which comprises all design, configuration, test and activation functions. Operations, which includes all planning, fabrication, support, control, safety and certification functions. Project management, which encompasses all commercial, scheduling, estimating and management functions. Supply chain, which includes all purchasing, contracts, logistics and warehouse management. Support, which comprises of a number of skillsets ranging from business development, sales and marketing to legal, IT and security. The use of job families allows for a relevant and robust discussion about future skill requirements (compared to, for example, use of sub-sectors). These job families aim to allow the industry to consider skills requirements as well as the timing of when these are required in the lifecycle of the four programs of work. These job families, functions and roles, while effective at codifying the existing industry skills requirements, will need to be revisited regularly to ensure that future job roles are considered and appropriately addressed. Tables 1 to 4 provides a list of the job functions contained within the respective job families. Table 1: Job functions contained within the job family Combat systems engineer Configuration management Design Document Control Electrical engineering assurance management Integrated logistics support (ILS) Maintenance engineer Materials engineer Mechanical systems engineering Naval architecture Production engineering Project engineering Propulsion system engineering Reliability engineering Safety engineering Signatures engineering Software engineering Structural engineering Systems engineering Technologist Test and activation Welding engineering PwC s Skills for Australia 7

8 Sector overview Table 2: Job functions contained within the Operations job family Operations Electrical operations Piping operation Facilities Planning Heavy fabrication Quality assurance and product safety Light fabrication Quality control Mechanical operations Safety and certification Operations support Welding operations Operators Table 3: Job functions contained within the Project Management job family and Supply Chain job family Program Management Commercial Program office Project management Project scheduling and estimating Supply Chain Inventory, warehousing and logistics Purchasing and subcontractors Table 4: Job functions contained within the Support job family Support Administration IT Business development Legal Business improvement Risk and insurance Communications Security Corporate executive Work, Health Safety and Environment (WHS&E) Finance Training Services Human resources Businesses in the sector The NSB industry is unique in that it is driven by the Australian Government s requirements as articulated by the various Government Departments, including Defence and Border Force. Government tenders define the requirements for products and services. Primes across Australia then work to develop solutions that best meet the specific requirements of these tenders. Australia has a strong history of naval shipbuilding, which most recently has included the final outfitting of the Canberra-class Landing Helicopter Dock (LHD) and the distributed build of the Hobart-class Air Warfare Destroyer (AWD) that was consolidated at the Osborne shipyard. 12 This industry is now in a redevelopment phase, with skills being re-established in the Australian workforce. As part of the continuous build program, there is an expectation on businesses in the industry to upskill Australian industry. 13 This work will span across Australia s advanced manufacturing, services and construction industries. Although there are a large number of businesses operating within the total shipbuilding and repair services sector in Australia, it is challenging to identify the exact number involved with NSB exclusively, or at all, because of the redevelopment phase the industry is in. PwC s Skills for Australia 8

9 There are shipbuilding and repair services businesses operating in most states. Businesses based in South Australia and Western Australia are primarily involved in defence-related shipbuilding, while business based in New South Wales, Tasmania, Queensland and Victoria are primarily involved in the repair and maintenance of commercial ships. 14 Four large companies accounted for approximately 61 per cent of revenue in the financial year. These companies were ASC Pty Limited, Thales Australia Holding Pty Limited, BAE Systems Australia Holdings Limited, and Civmec Construction & Pty Ltd. 15 However, the major companies and their market share are expected to change significantly as the announced head contracts are officially signed, and activity for these programs commences. Small to medium enterprises (SME) within the supply chain play an integral role in supporting the prime contractors by designing, manufacturing and assembling components. Consultation suggests that industry associations such as the Australian Defence Alliance (ADA), Australian Industry and Defence Network (AIDN) and the Defence Teaming Centre (DTC), among others, represent a significant portion of the approximately 3,000 SMEs across Australia. 16 At its peak, the SMEs within the supply chain are expected to employ almost a third of the NSB workforce. 17 PwC s Skills for Australia 9

10 Employment and skills outlook overview 2 Employment and skills outlook overview 2.1 Employment outlook As set out above, workers in the NSB industry may work in a range of job families. The NSB IRC recognises the existing body of work that has been produced by the Commonwealth Government in relation to employment and skills requirements. As the Skills Service Organisation (SSO), PwC s Skills for Australia was asked to examine existing literature, and work with the NSC to understand activities undertaken, as well as identify areas where additional consultation was required. This approach was suggested due to the volume of consultation already undertaken across the industry, and to minimise consultation fatigue. PwC s Skills for Australia has undertaken a number of stakeholder consultations nationally to test our findings and further refine our analysis in support of the NSB IRC. A list of stakeholders can be found in Section 4. This section outlines our analysis and findings in relation to employment and skills requirements. Overview In the NSB industry, workers operate across a diverse range of business types employed in a variety of job roles. Australia s marine manufacturing industry employed approximately 14,600 workers in The workforce is predominantly young (an average age of 30-35), male (approximately 90 per cent) and concentrated in South Australia and Western Australia (approximately 65 per cent of total employment). 19 The shipbuilding and repair sector, of which NSB is a large and important component (approximately 75 per cent of revenue), 20 is expected to grow consistently (average 4.4 per cent per annum) over the next five years, driven by the Australian Government s investment under the Plan. 21 It must be noted that the statistics above do not differentiate between commercial and naval shipbuilding. In addition, these numbers do not capture the complex weapon and combat system development and integration roles that form an integral part of naval shipbuilding activity. Employment growth is expected to occur across all NSB job roles, as noted in the Defence Industry Skilling and STEM Strategy, and the Plan. 22 Direct job growth in the NSB industry is predicted to grow by an additional 5,200 workers by Demand for workers with core manufacturing skills, such as fabrication and welding, will be particularly strong, and numbers will need to increase by a factor of four from current levels. 24 The naval shipbuilding and sustainment workforce, including acquisition and supply chain is projected to grow to approximately 15, While a majority of this employment is expected to be in South Australia and Western Australia, businesses in the shipbuilding industry are currently concentrated in New South Wales and Queensland (approximately 30 per cent). 26 This may reflect a concentration of smaller niche manufacturing firms and/or repair services for commercial ships (as such, not representative of the NSB industry specifically). The employment outlook by locations is set out below. South Australia (SA) The Attack Class submarines, the Hunter Class frigates and the first two Arafura Class OPVs will be built at Osborne Shipyard in SA, following a $535 million infrastructure upgrade. 27 This activity builds on current projects being delivered in SA including the construction and sustainment of the Collins Class Submarines, and construction of the nation s Hobart-class PwC s Skills for Australia 10

11 AWD. SA is also home to other key naval combat system projects, including the Canberraclass LHD mission system design, and Anzac Class combat system in-service support. 28 These activities are expected to result in high demand for new NSB workers in SA. There will be a requirement for grey collar technicians (such as technologists and information and communications technology (ICT) specialists). Grey collar technicians in this context can be defined as a group of workers who are able to undertake higher cognitive value add tasks and do not exclusively fit under the definition of blue or white-collar workforce. It is anticipated that the grey collar workforce is going to include a number of paraprofessionals and technicians. Western Australia (WA) The Arafura Class OPVs and Guardian Class pacific patrol boats will be built at Henderson Shipyard in WA. The build will leverage existing infrastructure, as well as an additional $1.5 billion infrastructure investment to upgrade to the Henderson shipyard in WA and support naval shipbuilding. 29 Key sustainment projects such as the mid-life capability upgrade for the ANZAC Class frigates and the mid-cycle dockings for the Collins Class submarine will continue to occur at the Henderson shipyard. Additionally, deep level maintenance for the Arafura Class OPVs will also be undertaken in WA. 30 These activities are eventually expected to result in high demand for new NSB workers in WA. Industry consultation suggests that in the short term demand for workers will remain consistent with current operations. However, this demand for workers with shipbuilding and sustainment experience is expected to ramp up significantly prior to build commencement for the Arafura Class OPVs in WA, scheduled for New South Wales (NSW) NSW has long been involved with naval shipbuilding and sustainment activity in Australia, and will continue to have a significant role into the future. NSW is home to one of the largest fleet exercise areas in Australia, located just off the east coast around Jervis Bay, Maitland Bay and adjacent sea and air spaces. These areas provided the RAN with the ability to develop task group capability and include a full spectrum of maritime security operations. 32 Maintenance activity for the existing fleet of surface ships will continue to take place across NSW. Fleet Base East in Sydney is home to the largest graving dock in the southern hemisphere, and will continue to be a critical national asset for fleet maintenance. 33 These activities are expected to result in demand for experienced sustainment workers consistent with current levels in the short term, with a slight increase anticipated in the long term. 34 Queensland Queensland based businesses have long supplied parts for naval ships built across Australia. The state also has a strong commercial boat building industry, which manufactures yachts and luxury boats for international export. 35 The Arafura Class OPVs will be based in Cairns and will require on-going maintenance support. The in-service support for the Guardian Class pacific patrol boats for Pacific nations will also take place in Far-North Queensland, making up some of the demand for workers with sustainment expertise. 36 The forecasted level of activity in Queensland is expected to result in gradual increase in demand for workers. Demand for workers with sustainment expertise is expected to remain consistent in the short term, with an increase in demand anticipated once the new fleets are operational. PwC s Skills for Australia 11

12 Employment and skills outlook overview Tasmania Tasmania hosts the Australian Maritime College at the University of Tasmania that provides education and training across a range of relevant naval shipbuilding qualifications and also hosts significant research infrastructures such as towing tanks, ocean wave basins and cavitation tunnels. 37 This is expected to result in in consistent demand, in line with current levels, for workers with sustainment expertise. They may be some additional workers required in Tasmania once the new fleet is operational. Australian Capital Territory (ACT) The ACT hosts businesses like Lockheed Martin and CEA Technologies, that are involved in developing weapons systems, radar and communication technologies for the RAN. While the overall level of activity related to naval shipbuilding is expected to increase in the ACT, demand for workers with the relevant skills and experience is expected to remain consistent. Northern Territory (NT) The Department of Defence is planning a $472 million upgrade of facilities at Larrakeyah Defence Precinct, and the construction of a new wharf and fuel farm to support naval operations in the North. 38 The NT Government has committed $100 million to the development of a ship lift facility that will be operational by The facility will have the capacity to lift vessels more than 90 metres in length, including the Arafura Class OPVs. Six of the OPVs will be home ported in Darwin at HMAS Coonawarra. 39 Demand for workers with maintenance and sustainment expertise is expected to notably increase once the first OPV is delivered in late Skills outlook The naval shipbuilding industry requires specialist skills and experience, over and above what is currently available within the Australian workforce. Industry specific training will be required for new entrants including those joining from other industries. Further training will be required to maintain those skill levels for the duration of these programs. 40 Long-term skills requirements have been historically difficult to predict. However, the continuous build program is expected to be different. The established $90 billion pipeline of work for frigates, submarines and OPVs has created certainty for the industry and given employers time to plan for, and develop the required skills. The skills required for each phase are different. The five job families can be used to help characterise the skills mix required for each program. The IRC s initial view of the skills outlook for the industry is set out below. This view is based on findings from the Defence Industry Skilling Survey (DISS) and PwC s Skills for Australia s industry consultations. The DISS was conducted in 2018 by the Department of Defence and respondents were asked to identify areas of skills shortage and the impact. 41 The engineering job family is important for the design, construction and maintenance of the ADF s complex equipment. 42 A number of engineering functions are likely to be required during the design phase of all four programs (e.g., structural engineering, naval architecture). Smaller numbers will be required for the build phase (e.g., materials engineer). There will also be requirements for engineers in the test and sustainment phase (e.g., test and activation, maintenance engineer, reliability engineer). A mix of these skills is required to perform ongoing maintenance and ensure the seaworthiness of the fleet. Many of the systems on these vessels will be digitised, automated, and run their own diagnostics. Modern weapon systems involve a higher level of PwC s Skills for Australia 12

13 complexity than the analogue systems they have replaced. These systems require higher levels of electrical and software engineering skills to maintain. 43 Defence industry identified engineering as the discipline most affected by skills shortage. Almost 73 per cent of respondents stated that there was a perceived shortage. 44 They identified the design engineering, systems engineering, software design and electrical engineering functions as having the most significant skills shortages. Operations Roles in this job family support large-scale production and manufacture of goods. Core skills include fabrication, welding, production design and boiler. 45 Fewer workers are required during the design and planning phase of these programs (e.g., planners, quality control), with larger numbers required for the build phase (e.g., heavy fabrication, light fabrication). Operations workers will be required throughout the test and sustainment phase, but in smaller numbers (e.g., safety and certification). These workers will be important for ensuring the seaworthiness of the fleet. Defence industry identified manufacturing as a discipline affected by skills shortages. Over 25 per cent of respondents stated that there was a perceived shortage. They identified the planning and production functions as having the most significant skills shortages. 46 Project management Roles in this job family support the delivery of goods and services through effective planning and coordination. Specialists employed in this job family can include contracting officers, project managers, project schedulers and cost estimators. 47 Workers in the project management family are required in small numbers across all four phases. They will be required for scheduling and estimation during the design phase. Once a program office has been established, they will need to manage the build, test and sustainment phases. Defence industry identified Program Management as a discipline affected by skills shortages. Almost 40 per cent of respondents stated that there was a perceived shortage. They identified the program management functions as having the most significant skills shortages. 48 Supply chain Supply chain and logistics refers to the practice of planning and organising complex activities. This could include arranging transport for people, materiel, or the maintenance of military systems. 49 Australia s defence industry provides logistical support through fleet and asset management services. The Government requires primes to maximise Australian industry involvement. Primes will therefore be seeking to add Australian suppliers to their supply chains for each of the programs. 50 Experienced supply chain workers are required during the design and planning phase of these programs. These workers will establish relationships with suppliers and subcontractors. They will work to develop and secure a continuous supply of goods and services. The requirement for qualified supply chain workers will decrease once these programs are established. Defence industry identified supply chain and logistics as a discipline affected by skills shortages. Almost 27 per cent of respondents stated that there was a perceived shortage. They identified the integrated logistics function as having the most significant skills shortages. 51 Support Roles in this job family can include a wide range of services, such as maintenance for complex systems, training, and ICT support. 52 Australia will be one of the leading nations to adopt a modern, digital shipyard. The IT function will consist of hardware and software PwC s Skills for Australia 13

14 Employment and skills outlook overview protocols around data management, security and storage of large data sets. It will also include the development of digital work packages, and human-machine interfaces. 53 Experienced support workers are required at the start of the program to help establish clear policies and ways of working. Smaller numbers of workers are required to operate and manage the support functions (e.g., IT, legal, finance and HR) during all three phases. Defence industry identified support services as a discipline affected by skills shortages. Over 27 per cent of respondents stated that there was a perceived shortage. They identified the cyber security function as having the most significant skills shortages. 54 Findings from NSC needs analysis The NSB industry needs a balance of professional, trade, technical and managerial skills. The industry faces additional challenges around competition for skilled labour, and the volume and quality of skilled workers produced by the education sector. Indeed, 72 per cent of businesses that responded to the DISS indicated that they had experienced difficulty in the recruitment of skilled candidates in the past 12 months. 55 Training and education needs, current use of training, and identified gaps by job family are set out in Table 5 below. Table 5: Training and education needs by job family Higher education Vocational Education and Training Operations This job family typically requires workers to have attained a Bachelor level qualification delivered by an Australian (or internationally recognised) university. While a majority of industry s skills requirements are met by existing degrees, consultations have revealed there is a need for more specific qualifications that produce work ready graduates. Prime contractors often require employees in this job family to have a minimum number of years of experience before they are able to sign off on deviation orders and design changes. Certain types of engineers are often allocated to different parts of the business where insufficient capability exists, with the aim of growing and developing that capability through on the job training. The operations job family does not generally require a Bachelor level qualification. Operations roles at more advanced levels begin to approach tasks undertaken by employees in the engineering job family. Industry indicate that there are limited numbers of job roles within this job family that require vocational training. Job roles within the operations job family generally require a Certificate III level qualification as a minimum requirement. Qualifications at this level that cover some of the skills required. These qualifications currently reside within the Manufacturing and (MEM) and Electrotechnology (UEE) Training Packages. NSC s need analysis has identified the need to modify existing units of competency, develop additional units of competency or develop new qualifications for welding, marine electrical and pipefitting. Additional details are provided in section 3.1 NSC needs analysis results. PwC s Skills for Australia 14

15 Higher education Vocational Education and Training Project management Supply chain Some supervisory and senior roles may require Bachelor level qualifications. From consultations, we heard that complex program management is a part of the training and education landscape that is not well catered for, with only one Masters level course delivered in Queensland. Engineers who have developed this capability through extensive on the job training have often been used to meet demand for complex program management. Some supervisory and senior roles may require Bachelor level qualifications. ILS jobs within this family have repeatedly been identified during consultations as a job function with a lack of adequate training. The ILS function is critical for the success of large, complex programs. Job roles within the project management job family require Certificate III level qualification as a minimum. Generalist qualifications exist in the Business Services (BSB) Training Package. NSC s needs analysis report has identified these courses as failing to meet the needs of the industry, or only partially meeting the needs of industry. NSC s needs analysis reports has identified that the scheduling and planning job functions, as undertaken in a naval shipbuilding environment, is not covered in any of the qualifications offered by universities or within training packages. Additional details are provided in section 3.1 NSC needs analysis results. From consultation, we know that entry-level job roles within this job family may not require any minimum qualification, but can require specific licences. For more senior roles, vocational and tertiary qualifications may also be required. Some of these training products sit within the Business Services (BSB), and Transport and Logistics (TLI) Training Packages and partially meet the NSB industry s skills needs. For ILS roles, industry consultation has indicated that the Australian Qualification Framework (AQF) level of the training currently provided is too low. Additional details relating to skills gaps will be made available once the NSC completes the scheduled needs analysis work. Support Due to the diversity of roles, there are different qualification requirements for workers in the support job family. Some supervisory and senior roles may require Bachelor level qualifications (e.g., Financial Controller, Accountant, Lawyer). Source: PwC s Skills for Australia analysis based on stakeholder consultation There are different minimum qualification requirements for workers in the support job family, depending on the specific role. Some relevant qualifications currently exist across multiple Training Packages (e.g., Business Services, Financial Services, Information and Communications Technology (ICT), and Transport Logistics). These qualifications partially meet the needs articulated by NSB industry stakeholders during consultation. The NSB industry, due to its unique nature, presents the need for specific support role skills. These include the management of import-export functions, compliance requirements for international traffic of arms restrictions (ITAR), and increased cyber security of information due to its national security implications. A number of different training packages and IRCs are responsible for developing training for the NSB industry. Given the training called out in Table 5, there are opportunities for the respective IRCs to collaborate with the NSB IRC and develop solutions fit for NSB industry. The skills and training needs of the industry continue to evolve and are being defined by the primes. PwC s Skills for Australia and the NSB IRC will continue to look for, and participate in, opportunities for collaboration around the identification of skills and requirements of training with other IRCs, the NSC and any other relevant organisations. From consultation, we heard that cross-sector skill areas that develop flexible and transferable skills have the potential to benefit learners, other industries and the broader VET sector. While collaboration with other IRCs and cross-sector projects may meet some of the training needs of the industry, additional NSB specific training may be required to develop the skilled workforce required by industry. NSC Needs Analysis Plan The NSC has developed a Needs Analysis Plan in consultation with defence industry and primes. The plan aims to identify skills and training gaps as perceived by industry, and then PwC s Skills for Australia 15

16 Employment and skills outlook overview prioritise the order in which job functions are addressed. The NSC s planned needs analysis work to 2020 is provided in Table 6 below. Table 6: NSC Needs Analysis Plan to 2020 Completed Active Scheduled Remaining Not Required Designer Management Combat Systems Engineer Electrical Electronic Mechanical Systems Production Systems Operations ILS Analysis ILS Publication ILS Training Test & Activation Software Assurance Materials Reliability Structural Welding Safety Project Management Engineer Configuration Management Maintenance Naval Architecture Project Signature Propulsion Systems Technologist Document Control Operations Production Planner Electrical operations Welding operations Piping Operations Pipe Fitter Light Fabrication Heavy Fabrication Piping Operations Pipe Welder Quality Control Inspector Quality Control Surveyor Quality Control Technicians Quality Control Analyst Quality Control NDT Technician Quality Control Dimension Control Manager QA & Product Safety Assurance Officer QA & Product Safety Engineer QA & Product Safety Safety Officer Production Controller Mechanical Operations Operations Planner Operators Technical Facilities Safety and Certification Dockmaster Project Management Project Manager Scheduler Program Manager Project Scheduling & Estimating Estimator Commercial Contracts Project Scheduling & Estimating Cost Analysis Supply Chain Source: NSC Needs Analysis Plan Purchasing & Subcontracts Purchasing Officer Purchasing & Subcontracts Subcontracts Administrator IWL Inventory Controller IWL Operator IWL Control Tech The NSC s current Needs Analysis Plan excludes the Support job family. This may be revisited, based on consultations and feedback from industry and primes, at a later date. The NSC expects all scheduled needs analysis activity to be completed before the end of 2019, with the remaining activity to be completed in PwC s Skills for Australia 16

17 Generic workforce skills As part of understanding the industry s skills outlook, the NSB IRC is required to rank a supplied list of 12 generic workforce skills in order of importance to relevant employers, shown in Table 7. All the skills listed are important. A low ranking does not imply that low usefulness or importance, but rather only indicates that these skills are not critical priorities for the NSB industry. Further, these rankings of importance are presented as an average across the NSB industry; some skills may have higher or lower importance for particular organisations or particular job families. Table 7: Ranking of key generic workforce skills Rank Generic workforce skill 1 Design mindset / Thinking critically / System thinking / Solving problems 2 Science, technology, engineering and maths (STEM) 3 Technology use and application 4 Communication / Collaboration including virtual collaboration / Social intelligence 5 Managerial / Leadership 5 Language, literacy and numeracy (LLN) 7 Learning agility / Information literacy / Intellectual autonomy and self-management 8 Entrepreneurial 8 Customer service / Marketing 8 Financial 8 Data analysis 8 Environmental and sustainability Source: Formal activity undertaken by IRC members on 13 December 2018 Note: These skills are read in line with definitions provided by the Commonwealth Department of Education and Training. 2.3 Training serving the sector No unique training currently exists in the vocational education and training (VET) system. Workers in the industry can obtain associated university degrees and VET qualifications from related Training Packages. A large number of workers in this industry are qualified under the Manufacturing (MEM), Manufacturing (MSM), Electrotechnology (UEE), Business Services (BSB), Sustainability (MSS), Information and Communication Technology (ICT), and Transport and Logistics (TLI) Training Packages. We have repeatedly heard in consultations that these qualifications and Training Packages do not cover all of the skills required by industry and the NSB IRC will need to consider where gaps exist. Given the diversity of job roles presented above, stakeholders believe it is likely that the industry will continue to rely on a mix of VET and higher education to train its workforce, including pathways between the two types of education. 56 The pathways between VET and higher education need to be better defined to allow workforce mobility. Lifelong learning is becoming increasingly important in adapting to automation and rapid technological change, including the challenges posed by Industry 4.0. Initial suggestions from consultations have included the use of microcredentials, skill sets, and greater support in relation to pathways for workers looking to upskill. Further discussion and analysis will be required prior to the development of a proposed schedule of work. PwC s Skills for Australia 17

18 Employment and skills outlook overview 2.4 Key drivers for change overview This overview of key drivers for change in the NSB industry outlines trends that are likely to present challenges, opportunities or threats in the medium term. These trends will lead to movements in the employment landscape (number and nature of jobs available), as well as the skills needed to succeed in those future roles. It is important to consider how these trends will impact the job families differently. Additionally, there are different time challenges associated with how these trends will impact the job families. Both of these aspects are explored further in this section Forward plan of work The most critical driver of change for the industry is the establishment of a forward plan of work and the industry establishing the capacity and capability to deliver that work. The industry is in a state of fundamental transformation, and not merely adapting to individual drivers as they emerge. The announcement of the $90 billion continuous shipbuilding program, and this once in a generation recapitalisation of the RAN, poses challenges and opportunities for the Australia economy. The secured pipeline of work t means that there is an unprecedented demand for skilled labour from an industry that has not specifically been catered for in over a decade. The NSB industry has experienced considerable change in that time, requiring specific skills and experience that may not currently exist in the Australian workforce, or have been lost in the preceding decade. The industry, at its peak is expected to employ over 15,000 people. 57 This workforce will be established based on the projects that have been announced for the next 30 years. Without this forward plan of work, other drivers for change for change would not exist. Given the forward plan of work, the following drivers effect how the required workforce will be established and skilled A workforce in transition As set out in Section 1, the industry is currently at a stage of capacity building and investment. Part of this will be establishing a workforce to deliver this capacity. The challenges and opportunities with establishing this workforce are set out below. Recently retrenched workforce There is an opportunity for the NSB industry to capture the available blue collar workforce that possess core manufacturing skills that have recently been made redundant from automotive manufacturing job roles. 58 There is also a cohort of blue collar workers who have experience in the NSB industry, but have been unemployed for extended periods of time. 59 The challenge with using this available workforce to its full potential is that defence industry and primes have historically struggled to assess the skill levels such cohorts of workers have developed in other sectors of the economy. From consultations, we heard that the most contemporary example of this challenge was around the mobilisation of a workforce for the AWD project. 60 Defence industry used the VET system to test and assess if workers from other sectors possessed the core technical skills at a Certificate III level. Once these employees commenced work, it quickly became apparent that not all of the assessed workers were able to perform at the expected level of competency. This experience has negatively impacted the confidence of defence industry and primes in the VET sector and is expected to impact the likelihood that the NSB uses the opportunity of this recently retrenched workforce. PwC s Skills for Australia 18

19 Demographics There is a growing ageing workforce across many Australian industries. 61 For NSB, these demographic challenges are exacerbated, as some of the recently retrenched workers will only be available for early phases of the NSB program, as they approach retirement age and exit the workforce. 62 This presents an opportunity to reskill and redeploy experienced workers, while facilitating knowledge transfer to younger apprentices, engineers and workers at an accelerated pace. A similar trend has been noted in the workforce that will be available to train NSB workers. From consultations, we heard that the cohort of people with the knowledge and experience to deliver training and education (in both VET and higher education) are exiting the sector due to age. 63 This is a risk for the NSB industry as it looks to ramp up activity to meet increased demand over the next 30 years. The NSB industry has historically been dominated by predominantly male workers across the various job families. 64 From consultations, we heard that defence industry and primes are working to address some of its key demographic challenges, and that there is an anticipated increase in gender, racial and cultural diversity in the industry which will need to be encouraged through the use of targeted initiatives. 65 International workforce The NSB industry requires highly knowledgeable, skilled and experienced workers across the job families, specifically in the engineering, operations, and project management job families. Consultations suggest that the primes are seeking international expertise in the short term to meet some of these requirements, as key skills and expertise are not widely available in Australia. 66 However, these efforts are often hindered or significantly delayed by rigorous security clearance requirements for international employees. In some instances, industry consultations suggest that this is proving to be a major barrier to employment. 67 A number of commonalities exist between other nations looking to undertake similar naval upgrades. 68 Therefore, there is a strong need to develop and retain a skilled local workforce, as competition for talent increases. Inversely, this also presents a unique opportunity for the Australian NSB industry to develop a fit for purpose system with the potential to export our products and learnings, in this competitive environment. SME workforce Defence industry SMEs are especially vulnerable to shortages of skilled labour. Consultation suggests that SMEs across the supply chain are competing for the same workforce, and often losing employees to the prime contractors. 69 Defence primes and larger businesses typically have access to workforce development and management resources that SMEs do not. These can include the capacity to invest in upskilling existing workers, or running development programs for graduate-level employees. 70 These trends, coupled with a weak pipeline of apprentices and graduates presents a significant risk to the NSB industry as SMEs become under-resourced and unable to keep pace with growing demand from the primes for products and services. PwC s Skills for Australia 19

20 Employment and skills outlook overview Perceptions of the sector The ability to attract workers to build capacity in the industry will be critical in this investment phase. However, this does depend on how the potential workforce perceives the opportunities in the NSB industry. Remuneration While the NSB industry offers highly competitive salary packages, 71 other industries within the economy that require similar skills, such as resources, oil and gas, and mining, are at times viewed as more attractive options for young workers. This is due to the perception of stronger remuneration and the flexibility of these roles. 72 Consultation has shown that the engineering job family has seen strong wage growth in the last calendar year (2018) for roles starting from the graduate level. 73 There is likely to be an increase in wages for white and grey collar workforce in the short to medium term. 74 While increased remuneration helps the NSB industry attract high quality talent, it poses challenges around affordability and sustainability. The Commonwealth Government and the primes need to maintain an affordable cost base to realise Australia s export ambition. The sustainability of the industry may be compromised in the long term if costs are not moderated, as shipbuilding in Australia currently costs 30 per cent to 40 per cent more than NSB in the United States of America. 75 With sustained naval shipbuilding activity in Australia, and the establishment of the industry, these premiums are expected to decrease to be more globally competitive. Communication with talent pool The NSB industry is perceived to be a high risk industry, given the historic volatility and the boom bust nature of NSB in Australia. 76 From consultation we heard that while there is a strong pipeline of confirmed shipbuilding projects across Australia, the industry struggles to attract school leavers and younger workers due to this perception. 77 Some of the perceptions around work culture and the value proposition of working for defence industry and primes need to be better communicated to the talent pool defence industries are looking to attract Technological change Given the state of the industry, being in a transition phase after a period of reduced activity, new technologies will be a key consideration when investing in capacity. Industry 4.0, sometimes referred to as the fourth industrial revolution, is the current trend of automation and data exchange in manufacturing technologies. It includes advanced automation and robotics, sensor technology and data analytics, cloud computing, and artificial intelligence and machine learning. 78 Industry 4.0 will have significant implications for naval shipbuilding in Australia, some of which are yet to be understood, due to the length of these programs. Digital shipyards Over recent years, shipbuilders have been working to bring streamlined, data-rich efficiency to the design and build process. 79 The next generation, digitised and data-driven shipyard promises cheaper and more efficient design and construction, and also reduces the overall cost of ownership. 80 A digital shipyard can be thought of as a single common repository of design data that is always current, and available to anyone who needs it. It allows the operator of any of these vessels to encompass the entire supply chain and all relevant stakeholders across the entire program. Stakeholders have indicated that there are two distinct requirements for skills within NSB digital shipyards. First, there is a requirement for higher base level digital literacy across the workforce as all roles and activities are expected to be digitally tracked for greater efficiency and quality control. 81 Secondly, specific skills are required for managing an optimised PwC s Skills for Australia 20

21 logistics function, where a digital clone of the vessel allows the supply chain to predict what components will be required and when. 82 Digital design and advanced manufacturing Digital design processes will be a major driver of Industry 4.0 trends over the coming decade, as they will assist industry to improve design accuracy and efficiency. While this means that the nature of design skills is changing, digital design skills will continue to be essential to Australia s defence capability and the naval shipbuilding industry. 83 High-tech SMEs SMEs within the supply chain operate in niche manufacturing areas and are already employing a number of advanced manufacturing technologies. 84 The SMEs require workers to have highly advanced technology skills in order to set-up and operate new systems, processes and technologies. It is expected that these skills will feed into the primes as they ramp up production and experienced employees move from SMEs to the primes. PwC s Skills for Australia 21

22 3 Proposed responses 3.1 NSC need analysis results The NSC has undertaken detailed needs analysis in consultation with defence industry and primes. The methodology for the needs analysis involved undertaking high-level research including identification and analysis of job advertisements and role descriptors to identify the appropriate levels of skills and knowledge required. The analysis included requirements for entry-level work, through to more advanced roles. Initial high-level research was followed up and validated through consultations with industry stakeholder and surveys. The NSC has undertaken and completed needs analysis for seven job functions across three job families. The following areas for consideration have been identified from the work completed to date. Needs analysis has been completed for the design job function within engineering, with the gaps found in analysis shown in Table 8. Table 8: Skills and training gaps engineering Skills gap Training gap Lack of adequate knowledge of core design concepts, and geometric dimensioning and tolerancing for individual components within the full design. Lack of understanding of databases and big data used to support repositories as part of design processes, and around integration of systems within a design. Design standards for pressure vessels are unique and require further attention, specifically for learners looking to work as part of the submarine program. Design requirements, linked to supply chain management and aspects of ILS should have a greater influence on design work. These principles are not covered by the higher education and VET sectors. No VET qualifications or units of competency relating to shipbuilding, marine design, naval architecture or marine engineering currently exist. Limited program offerings for bachelor degree level programs in marine engineering and design. NSC s needs analysis reports on design has identified the need for: developing new units of competency focused on shipbuilding and marine design to up-skill designers from allied industries developing technical qualifications for marine design with emphasis on traineeships and up-skilling current employees within the shipbuilding industry developing new units of competency to provide specific content relating to the software packages used in the Australian shipbuilding industry developing a new marine designer qualification based on the existing MEM40412 Certificate IV in Drafting developing a new marine designer qualification based on existing MEM50212 Diploma of Technical developing a new marine designer qualification based on the existing MEM60112 Advanced Diploma of PwC s Skills for Australia 22

23 Proposed responses developing a bachelor and master level qualification for engineering / marine design; and ensuring undergraduate engineering / marine design students have the opportunity to engage with industry and view shipyards. Operations Needs analysis has been completed for the welding, marine electrical and pipefitting job functions within operations. The resulting skills and training gaps are shown in Table 9. Table 9: Skills and training gaps operations Skills gap Training gap Welding Workers in the industry currently use visual inspection and destructive testing methods. Skills for non-destructive testing methods such as ultrasonic, X-ray and Mag particle testing are currently not available. Marine electrical Cables, connections and penetrations are significantly different when compared to domestic or commercial electrical installation. Welding Current welding training covers the basic requirements at a high level, but does not provide adequate exposure to weld procedures used in practical welding activities. Marine electrical Existing training has a domestic and commercial building installation focus. It is specific in content and restricts opportunities to produce material to support marine electrical training. No nationally endorsed high voltage units available within the VET system; this is a critical component of naval ship power requirements. Pipefitting Current plumbing trade training provides very limited exposure to pipefitting requirements and skills. The materials and joining techniques used are very different between the plumbing and pipefitting trades. NSC s needs analysis reports on welding has identified that existing training does not equip learners with key skills such as: the ability to weld in confined or restricted spaces examine welds using non-destructive testing methods knowledge of special materials that are being used on current shipbuilding projects; and an understanding of typical shipbuilding weld procedures. NSC s needs analysis report on marine electrical has identified the need for: new units of competency that allow domestic electricians to be job ready for shipbuilding and sustainment applications new skillsets to be made developed and made available during the electrotechnology apprenticeship programs new qualification (Certificate III in Marine Electrician); and new pre-vocational course for entry into the shipbuilding industry and other manufacturing industries (Certificate II in Industrial Electrical (Career Start)). NSC s needs analysis report on pipefitting has identified the need for: modifying existing units of competency to increase the amount of pipework specific training within current fabrication training PwC s Skills for Australia 23

24 modifying existing units of competency to incorporate numerically controlled (NC) pipe bending technologies into current fabrication training modifying existing MEM Training Package content to allow for delivery and assessment of units of competency specific to pipework fabrication creating new units of competency that develop skills in the interpretation of ship pipe drawings; and developing a new qualification (Certificate III in Pipefitting or Maine Pipefitting). Project management Needs analysis has been completed for the project management, planning and scheduling job functions. The resulting skills and training gaps are shown in Table 10. Table 10: Skills and training gaps project management Skills gap Training gap Successful project managers need to understand the underlying design, engineering and production principles used when working on these programs. This content is not addressed in any VET qualifications. Existing courses do not prepare workers from outside the NSB industry to succeed in these roles. This is due to a lack of contextualisation, limited examples and relevant case studies that look at shipbuilding specific challenges. While most engineering courses include some project management principles, this content is not sufficient to meet industry needs. A lack of specific VET qualifications or units of competency that address the shipbuilding planning and scheduler roles competency requirement. Planning, as undertaken in NSB, is not covered in any of the qualifications offered by universities or VET training packages. NSC s needs analysis report for project management has identified the need for: developing new units of competency focused on shipbuilding to up-skill Project Managers from allied industries modifying existing units of competency to include an increased focus on digitally enabled production processes modifying existing units of competency to focus on software applications and specialist project management knowledge NSC s needs analysis report for schedulers has identified the need for: developing a new qualification to specifically address the requirements of Schedulers within the shipbuilding industry and other complex advanced manufacturing industries; and developing a Scheduler apprenticeship path. NSC s needs analysis report for planners has identified the need for: developing a new qualification to up-skill existing trades workers into planners. 3.2 Proposed responses The IRC is in ongoing dialogue with the Australian Industry Skills Committee (AISC) and the Department of Education and Training regarding the appropriate timing and scope of NSB training product development. The gaps identified in previous PwC s Skills for Australia 24

25 Proposed responses sections are contained within training packages that are the responsibility of a number of different IRCs. The NSB IRC will establish meetings with the relevant IRCs and SSOs to understand the extent to which unique NSB units and qualifications may be necessary. Given this, and ongoing work across the industry including the scheduled needs analysis being undertaken by the NSC, this Industry Skills Forecast and Proposed Schedule of Work does not propose any projects at this time. It is likely that the job families will form the scope of the projects and below are some general themes we will address with colleagues in other IRCs and in future cases for change. Industry consultations have indicated that graduate engineers leaving university are not considered work ready. Graduates do not have a practical understanding of the work environment, and do not possess the skills required to undertake engineering tasks on day one. They require a period of familiarisation and on-the-job training to be able to complete relevant tasks. Therefore, stronger coordination and communication between defence industry, primes and the higher education sector is suggested. This will help identify or create opportunities for learners to have greater exposure to the industry prior to graduation. Responses to the DISS and industry consultations have both identified opportunities for experienced workers with vocational qualifications to transition into junior engineering roles. Consultations suggest that these experienced workers are better equipped to step into junior engineering roles than new graduates, as they possess the core skills and require less time to familiarise themselves with the work environment. Pathways for these workers to transition into engineering jobs exist through employer driven on-the job training. These pathways need to be better articulated and more clearly defined across the industry by both employers and accreditation organisations, including clear policies around recognition of prior learning. Top-up qualifications may be required to meet any identified skills gaps or regulatory and licensing requirements. Specific responses have been developed by the NSC to address the findings of the need analysis report for the designer job function. These have been developed in collaboration with the primes and defence industry. The recommendations include either modifying or developing new units of competency that cover feature-based collaborative modelling, and the development of associate level degree level programs in engineering design or marine engineering. Operations Industry consultations have indicated that workers with existing qualifications for the operations job family need supplementary training to attain the required skill level, as not all of these skills are not developed while undertaking the stipulated training. Stakeholders have articulated the need for greater numbers of AQF level 5 and level 6 qualified technologists to prepare the industry to respond to the technological disruption associated with Industry 4.0. From consultations, we know that the grey collar workforce is seen as a critical component for the future of the NSB industry. 85 These higher AQF level qualifications for naval shipbuilding do not currently exist in VET training packages. To develop skills identified through the NSC s needs analysis, new training products will be required. The development of additional training products and units of competency focused on non-destructive testing methods, modern materials, marine electrical, electrotechnology, and marine pipefitting will equip learners with necessary skills to succeed in this industry. Additional responses may be proposed as the NSC completes its planned needs analysis activity and identifies priority skills. For some specialised skills that are required exclusively for the NSB industry which require smaller numbers of workers, training may be delivered on the job at shipyards across Australia, as well as through some additional non-accredited courses delivered by the primes. PwC s Skills for Australia 25

26 Project management For this job family, additional degree qualifications are required for complex program management, as well as VET qualifications to address skills gaps in the planning, scheduling and estimation functions. Industry specific project and program management qualifications may be required to ensure relevance (where cross-sector units are combined with the specifics skills required to manage projects in naval shipbuilding). Specific responses have been developed by the NSC to address the findings of the needs analysis report focusing on the project management, planning and scheduling job functions. These include incorporating additional shipbuilding specific case studies, and lessons learned from project issues that have been experienced in real-life Australian ship construction projects such as the AWD and the Collins Class builds. The project management job function would benefit from the development of new units of competency focused on shipbuilding to upskill project managers from allied industries who already hold VET or higher education qualifications. Modifying training package content to include an increased focus on digitally enabled production processes will provide workers the skills to work effectively in a modern Australian shipyard. Units of competency will need to be either developed or modified to focus on software applications and specialist shipbuilding project management knowledge and skills. The scheduler job function would benefit from the development of a VET qualification at AQF level 5 or level 6, to address the specific requirements of schedulers operating within the shipbuilding and other complex advanced manufacturing industries. Developing a scheduler apprenticeship pathway will enable greater worker mobility and provide the industry with access to a larger pipeline of talent. The planner job function would benefit from the development of a VET qualification at AQF level 5 or level 6 to up-skill existing trades workers into the planner job function. This, like the apprenticeship pathway for schedulers, would enable greater worker mobility and provide the industry with access to a larger pipeline of talent. Supply chain The supply chain job family requires the development of AQF level 7 and level 8 qualifications for workers to develop the skills required to set up an ILS function for these programs. Once established, the ILS function can be managed by AQF level 5 and level 6 qualified workers. Lower AQF level qualified workers may be able to operate and sustain the function in the medium and long term. Stakeholders have articulated the need for additional training that allows for the upskilling of existing workers to undertake more complex and specialised tasks in the area of supply chain operations and management. This is part of a broader requirement to develop a larger grey collar workforce across the industry. Support From consultations we have heard that some of the job functions in this job family may be catered to by existing training packages and do not need to be reviewed. However, additional NSB specific training may be required within the legal, IT, finance and HR functions, due to the unique requirements of the industry and the sensitive nature of the work being undertaken. Additional consultations will need to take place to identify the specific skills and training gaps for the support job family. PwC s Skills for Australia 26

27 Consultation undertaken 4 Consultation undertaken Given that this Industry Skills Forecast does not include any proposed work on training packages, consultation on the content has been included in, and informed by, PwC s Skills for Australia s ongoing work engaging with employers, unions, the Department of Defence, SMEs, and the IRC. A list of stakeholders consulted to date is presented in Table 11 below. Table 11: List of stakeholders Name Dianne Edgerton Margot Forster Bill Docalovich Mark Scott Brad Anderson Nick Howie Paul Whetstone Ian Curry Christian Hamilton Alun Gallie Nick Dudley Rob Milligan Grant Nelson Scott Neil Dan Fankhauser Ron Watts Glenn Crawley J Russel Sheryl Harrington Rachel Botting Lorraine Cody Warwick Adams Organisation Directedge Manufacturing Defence Industry Education and Skills Consortium (DIESC) College (NSC) NSC NSC NSC NSC Australian Manufacturing Workers Union (AMWU) Australian Submarine Corporation (ASC) ASC ASC Lockheed Martin Australia Lockheed Martin Australia Department of Defence Department of Defence Engineers Australia Engineers Australia Engineers Australia Engineers Australia Naval Group Naval Group Naval Group Consultation on this Industry Skills Forecast is currently ongoing and includes publication of this document for public review before it is finalised. If you would like to share comments or feedback on this document, you can provide these to info@skillsforaustralia.com. The finalised version of this document for submission to the AISC will include a summary of stakeholders consulted and issues and sensitivities raise in those consultations. PwC s Skills for Australia 27

28 5 Proposed Schedule of Work overview 5.1 Next steps The IRC is in ongoing dialogue with the AISC and the Department of Education and Training regarding the appropriate timing and scope of NSB training product development. The gaps identified in previous sections are contained within training packages that are the responsibility of a number of different IRCs. The NSB IRC will establish meetings with the relevant IRCs and SSOs to understand the extent to which unique NSB units and qualifications may be necessary. Given this, and ongoing work across the industry including the scheduled needs analysis being undertaken by the NSC, this Industry Skills Forecast and Proposed Schedule of Work does not include any projects or cases for change at this time. It is likely that the job families will form the scope of projects that we will address with colleagues in other IRCs and in future cases for change. The NSB IRC expects to have a better understanding of priority projects and cases for change by the third quarter of calendar year PwC s Skills for Australia 28

29 6 IRC Sign off The Industry Skills Forecast and Proposed Schedule of Work was agreed to by: [To be finalised with Chair signature] PwC s Skills for Australia 29

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31 Appendices